Developers can’t keep up with demand for new apartments in Miami, according to a new report by Berkadia.
Demand for rental apartments in the area is so strong that the only limitation to how fast the new apartment buildings in Miami are filled is elevator capacity for tenant move-ins, the report said.
Absorption is far exceeding all of the new supply coming to market, the report added.
High demand has caused both rents and occupancy levels rise significantly in the last quarter.
In the second quarter of 2021 alone, net absorption of apartments in the Miami area surged to 10,028 apartment units even though just 4,855 new apartments were delivered in the same period.
The high level of demand caused rents to ‘vault’ in Q2 by 5.3% compared to the first quarter. Occupancy also surged quarter over quarter by 80 basis points.
Overall, the Downtown Miami/South Beach and Fort Lauderdale submarkets outpaced the metro area as a whole during the quarter.
Charles J. Foschini, senior managing director for Berkadia in Miami, told Globest.com and the SFBJ that sometimes the only limitation on how fast new buildings can be filled is elevator capacity. Move-ins create high demand for elevators, limiting the speed on which leases can be signed, he said.
Developers are preparing to break ground on another 17,300 apartment units in the next four quarters.
The Downtown Miami/South Beach submarket has seen particularly strong demand, and developers will focus on that area.
More than one third of new inventory planned to break ground in the next year is in the coastal Downtown Miami/South Beach, North Central Miami, and Coral Gables/South Miami submarkets.
More than one-quarter of the new apartment stock in the metro area delivered in the first half of 2021 alone was in the Downtown Miami/South Beach and Coral Gables/South Miami submarket as developers respond to “healthy” demand in those areas.